Correlation Between GreenTree Hospitality and Arcos Dorados
Can any of the company-specific risk be diversified away by investing in both GreenTree Hospitality and Arcos Dorados at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GreenTree Hospitality and Arcos Dorados into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenTree Hospitality Group and Arcos Dorados Holdings, you can compare the effects of market volatilities on GreenTree Hospitality and Arcos Dorados and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GreenTree Hospitality with a short position of Arcos Dorados. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenTree Hospitality and Arcos Dorados.
Diversification Opportunities for GreenTree Hospitality and Arcos Dorados
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GreenTree and Arcos is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GreenTree Hospitality Group and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings and GreenTree Hospitality is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GreenTree Hospitality Group are associated (or correlated) with Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of GreenTree Hospitality i.e., GreenTree Hospitality and Arcos Dorados go up and down completely randomly.
Pair Corralation between GreenTree Hospitality and Arcos Dorados
Considering the 90-day investment horizon GreenTree Hospitality Group is expected to generate 1.2 times more return on investment than Arcos Dorados. However, GreenTree Hospitality is 1.2 times more volatile than Arcos Dorados Holdings. It trades about 0.0 of its potential returns per unit of risk. Arcos Dorados Holdings is currently generating about -0.04 per unit of risk. If you would invest 276.00 in GreenTree Hospitality Group on December 2, 2024 and sell it today you would lose (5.00) from holding GreenTree Hospitality Group or give up 1.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
GreenTree Hospitality Group vs. Arcos Dorados Holdings
Performance |
Timeline |
GreenTree Hospitality |
Arcos Dorados Holdings |
GreenTree Hospitality and Arcos Dorados Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GreenTree Hospitality and Arcos Dorados
The main advantage of trading using opposite GreenTree Hospitality and Arcos Dorados positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenTree Hospitality position performs unexpectedly, Arcos Dorados can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arcos Dorados will offset losses from the drop in Arcos Dorados' long position.GreenTree Hospitality vs. InterContinental Hotels Group | GreenTree Hospitality vs. Atour Lifestyle Holdings | GreenTree Hospitality vs. Huazhu Group | GreenTree Hospitality vs. Hyatt Hotels |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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